IT stocks survive market fall

Volatility in global markets and rising crude oil prices ensured that the sentiment hit by last month's steep market fall remained edgy. While most stocks tumbled, IT stocks bucked the trend as the rupee fell to a 5-month low of 40.11 against the dollar on Wednesday, 20 February 2008. Small-and mid-cap stocks escaped the battering, as there have been comparatively less speculative positions in these counters.

Crude oil, which rose to a record high of $100.10 a barrel on the New York Mercantile Exchange on Tuesday, 19 February 2008 gave rise to fears of higher commodity prices, thus increasing inflation concerns in the back drop of a slowdown in global growth.

The 30-share BSE Sensex slipped 766.18 points or 4.23% to 17,349.07, in the week ended 22 February 2008. The S&P CNX Nifty lost 192.15 points or 3.62% to 5110.75, in the week.

The BSE Small-Cap index lost 25.72 points or 0.27% to 9,595.41 in the week. The BSE Mid-Cap index rose 2.37 points or 0.03% to 7,594.45 in the week.

Inflation based on the wholesale price index (WPI) rose to 4.35% for the week ended 9 February 2008 from 4.07% in the previous week, data released by the government on Friday showed.

Breaking a three-day winning streak, the market edged lower on Monday, 18 February 2008 on profit taking. The 30-share BSE Sensex was down 67.20 points or 0.37% at 18,048.05. The broader based S&P CNX Nifty was down 26 points or 0.49% at 5,276.90.

After holding positive ground for most part of the day, the market succumbed to selling pressure in late trade erasing almost all gains on 19 February 2008. The 30-share BSE Sensex rose 27.61 points or 0.15% at 18,075.66. The broader based S&P CNX Nifty gained 3.90 points or 0.07% at 5,280.80.

The domestic bourses tumbled on negative cues from the global markets on 20 February 2008. The 30-share BSE Sensex was down 458.06 points or 2.53% at 17,617.60. The broader based S&P CNX Nifty was down 126.35 points or 2.39% at 5,154.45.

The market staged a strong rebound in late trade to wipe-off losses and post modest gains on 21 February 2008. The 30-share BSE Sensex was up 117.08 points or 0.66% at 17,734.68. The broader based S&P CNX Nifty gained 37.35 points or 0.72% at 5,191.80.

Key benchmark indices tumbled on 22 February 2008 as blue chips came under renewed selling pressure. Weakness in Asian stocks triggered the latest round of selling on the domestic bourses. The 30-share BSE Sensex fell 385.61 points or 2.17% at 17,349.07. The broader based S&P CNX Nifty was down 81.05 points or 1.56% at 5110.75.

IT stocks bucked the weak market trend as weakening rupee eased concerns of pressure on profit margins of IT firms arising from a solid surge in the rupee against the dollar in the past one year. The BSE IT index rose 0.99% to 3,918.28 in the week. Infosys Technologies (rose 0.98% to Rs 1580.10), TCS (rose 2.98% to Rs 897.45), Wipro (rose 0.51% to Rs 422.40) and Satyam Computer (rose 0.14% to Rs 438.80), edged higher.

More than 50% of the revenues of Indian software companies come from the US. IT stocks also gained momentum on reports that the government might consider fresh tax sops to the export sectors which has been hit by rupee’s surge.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) slipped 6.21% to Rs 2429.80 in the week. As per reports, the company is in advanced talks with the New York-based Vornado Realty Trust, one of the world’s top five real estate asset managers, to float a $1-billion plus fund.

India’s largest public sector engineering company in terms of profit Bharat Heavy Electricals dropped 8.95% to Rs 2058.85. As per reports the company has bagged an order worth Rs 650 crore from General Electricity Company, Libya for setting up a 300 megatwatt gas turbine based power plant.

India’s largest private sector engineering company in terms of revenue Larsen & Toubro slipped 2.91% to Rs 3434. The company said on Monday, 18 February 2008, it has bagged an order worth Rs 1250 crore from Oil & Natural Gas Corporation.

Anil Dhirubhai Ambani Group firm Reliance Power jumped 8.36% to Rs 416.85. The board of the company will meet on Sunday, 24 February 2008, to consider issue of bonus shares. The bonus shares will be issued to non-promoter shareholders to compensate the losses suffered by them when the company was listed last week. The stock has been consistently trading at a discount to IPO price of Rs 450, since its listing on 11 February 2008.

Centurion Bank of Punjab gained 12.69% to Rs 56.40 in the week. As per reports, HDFC Bank is in merger talks with Centurion Bank of Punjab (CBoP). The share-swap deal, worth over Rs 10,000 crore, may be worked around the current market price of CBoP, the reports suggested. HDFC Bank declined 5.70% to Rs 1474.95 in the week.

In a communiqué to the Bombay Stock Exchange, HDFC Bank said that “presently there is no such proposal for the consideration of the board of directors of the bank”, while CBoP said it would not like to comment the matter.

Bang Overseas debuted on 20 February 2008 at Rs 207 on BSE, which was the same as the IPO price of Rs 207. On that day, it settled at Rs 171.80 on BSE, a discount of 17% over the IPO price. The IPO of Bang Overseas had ended on 31 January 2008 with 1.24 times subscription. The IPO had received bids for 43.55 lakh shares as against 35 lakh shares on offer.

Shriram EPC debuted on 20 February 2008 at Rs 290 on BSE, a discount of 3.3% over the IPO price of Rs 300. On that day, it settled at Rs 293.60 on BSE, a discount of 2.1% over IPO price. Shriram EPC IPO had ended with 3.91 times subscription on 1 February 2008. The IPO had received bids for 1.95 crore shares as against 50 lakh shares on offer.

OnMobile Global debuted on 19 February 2008 at Rs 440, which was the same as the IPO price. On that day, it settled at Rs 521.90 on BSE, a premium of 18.6% over IPO price of Rs 440. The OnMobile Global IPO, which ended on 29 January 2008, was subscribed 10.95 times at the last day of its issue. The IPO received bids for 11.93 crore shares as against 1.09 crore shares on offer.

KNR Constructions debuted at Rs 180 on BSE, a premium of 5.8% over the IPO price of Rs 170. On that day, it settled at Rs 154.35 on BSE, a discount of 9.2% over IPO price. The KNR Construction IPO, which ended on 29 January 2008, was subscribed 1.25 times at the last day of its issue. The initial public offer (IPO) received bids for 98.72 lakh shares as against 78.74 lakh shares offered.

Direct tax collections surged over 40% in April 2007-15 February 2008. Net direct tax collections jumped 41.4% to Rs 228745 crore from Rs 161776 crore in the corresponding period of the previous fiscal. It achieved over 85% of budgeted direct tax target of Rs 267490 crore.

Corporate tax collection advanced 38.78% to Rs 138073 crore in April 2007-15 February 2008 compared with Rs 99488 crore in the corresponding period of the previous fiscal. Personal Income Tax (including FBT, STT and BCTT) catapulted 45.64% to Rs 90356 crore from Rs 62040 crore.

Securities transaction tax (STT) leaped 84.64% to Rs 7878 crore as against Rs 4267 crore. Fringe benefit tax (FBT) scaled up 29.75% to Rs 5216 crore from Rs 4020 crore. Banking cash transaction tax (BCTT) rose 16.81% to Rs 478 crore compared with Rs 409 crore.

On 19 February 2008, the Union government extended the exemption of service tax to three more services as a part of its ongoing exercise to provide relief to exporters hit by the appreciating rupee against the US dollar. The three services included in the relief package are couriers, goods transport agencies and the Railways.

On 18 February 2008, Atomic Energy Commission Chairman Anil Kakodkar in Bangalore, informed there are complex issues which has to be dealt with step-by-step and the Indo-US nuclear deal would take time as it is the first attempt. Kakodkar's remarks were a response to Washington insisting that the safeguards agreement needed to be clinched fast as time was running out.